Last week I attended a cashflow game meeting through Meetup.com. It was lots of fun and I meet a few retired people who had made a ton of money through their real estate investments, even though they had ordinary jobs. One was a carpenter and the other was a programmer.
Both of them bought at the bottom of a cycle and held on to their properties for 2 decades. The result was that they became millionaires and eventually were able to live off the income their assets produced. Both of them retired several years before they hit 65, although they still found profitable ways to stay busy.
If you haven't seen Meetup.com check it out now. Its a great networking site. You don't know what you're missing.
Fancy Watches On The Cheap
During the last stock market boom I had made a little bit of money. At that time I had often contemplated buying an expensive watch but it seemed like such a waste of money and I put it off. Anyway the market crashed and so did my dreams of owing an expensive watch. I promised when I made some money again, I definitely enjoy some of it.
Part of that enjoyment was traveling, which I did a fair amount of in the past 2 years. But now that watch idea has reared its head again after I saw my boss's Omega Seamaster
today. After work I went to a local jewelery store and spent 2 hours checking out the different watches.
Here's the ones I liked. Of course they cost around 20-50% cheaper online.
There was only one Rolex that I liked, the Rolex Daytona Oyster, but at $13,000 I'm not interested. For that price it better be able to stop time!
Before buying any watch online, make sure you know what size suits your wrist. For me I felt the 42 mm felt the best, but the range is from 39mm to 45mm. If you get the wrong size, you won't enjoy it.
I also like the Omega Speedmaster Moon to Mars, but all the NASA-approved Moon series watches come with a Plexiglass crystal instead of the regular sapphire. This makes them scratch resistant but not almost-scratch-proof!
Plus every 5 years (10 for the new Omega Coaxial series) you need to spend $400-500 to get them serviced, so its an on going commitment. (kind of like an expensive girlfriend!)
Anyway, if I buy one I'll let you know. It'll probably be from Amazon.com.
And if any of you are feeling generous, I'm open to accepting gifts and donations ;-)
Part of that enjoyment was traveling, which I did a fair amount of in the past 2 years. But now that watch idea has reared its head again after I saw my boss's Omega Seamaster
today. After work I went to a local jewelery store and spent 2 hours checking out the different watches. Here's the ones I liked. Of course they cost around 20-50% cheaper online.
- Omega Speedmaster Michael Schumacher Limited Edition
- Omega Seamaster Planet Ocean
- Omega Speedmaster Day Date
- Mens Tag Heuer Carrera 40th Anniv
- TAG Heuer Carrera Steel And Gold
- Tag Heuer Link
There was only one Rolex that I liked, the Rolex Daytona Oyster
, but at $13,000 I'm not interested. For that price it better be able to stop time!Before buying any watch online, make sure you know what size suits your wrist. For me I felt the 42 mm felt the best, but the range is from 39mm to 45mm. If you get the wrong size, you won't enjoy it.
I also like the Omega Speedmaster Moon to Mars
, but all the NASA-approved Moon series watches come with a Plexiglass crystal instead of the regular sapphire. This makes them scratch resistant but not almost-scratch-proof! Plus every 5 years (10 for the new Omega Coaxial series) you need to spend $400-500 to get them serviced, so its an on going commitment. (kind of like an expensive girlfriend!)
Anyway, if I buy one I'll let you know. It'll probably be from Amazon.com.
And if any of you are feeling generous, I'm open to accepting gifts and donations ;-)
Housing Update From WSJ
Todays WSJ had a decent article on housing, 'Housing Glut Gives Buyers Upper Hand'. Seems like certain parts of the country are in for a bumpy ride. Here are some excerpts.
*A quarterly survey of housing conditions in 28 major metropolitan areas by The Wall Street Journal showed that the inventory of unsold homes at the end of 2006 was up substantially in nearly all of the markets from the already plentiful level of a year earlier. The biggest increases were in the metro areas of Miami-Fort Lauderdale, Orlando, Tampa and Jacksonville, Fla.; Phoenix; and Portland, Ore. (Unlike the other cities, Portland had a lean supply of homes a year before.)
*Some of the biggest gluts of new homes are in Florida, Phoenix and the outer suburbs of Washington, D.C., says Ivy Zelman, a Cleveland-based housing analyst for Credit Suisse Group. Many of the gluts are due to frantic building of condominiums over the past few years. The supply of condos listed by real-estate agents is up 86% from a year earlier in the Las Vegas metro area, 43% in Washington, D.C., and 21% in the Northern Virginia suburbs of Washington. In Florida's Miami-Dade and Broward counties, the listed condo supply has more than doubled from a year earlier.
In Miami-Dade, the number of existing condos on the market is enough to last 27 months at the current sales rate, says Jack McCabe, a real-estate consultant in Deerfield Beach, Fla. The oversupply will grow, he says, as about 8,000 condos are expected to be completed this year and 12,000 in 2008.
"It's going to get bloody down here," Mr. McCabe says. He estimates that condo prices in Miami-Dade fell between 8% and 10% last year and will drop 20% in 2007. Eventually, he predicts, hedge funds and other investors will step in to buy surplus condos in bulk at huge discounts.
*In California's San Diego County, developers have more than 10,000 condos available for sale in new buildings, projects under construction or properties being converted from rentals, says Peter Dennehy, a senior vice president at Sullivan Group Real Estate Advisors, a consulting firm based there. He says that supply is enough to last more than 20 months at the current sales rate. That number excludes several thousand condos being offered for resale by speculators and others.
Mr. Dennehy estimates that condo prices have fallen at least 15% to 20% in the county over the past year, though it's hard to measure price changes because sellers often give incentives such as free upgrades or help with closing costs that aren't reflected in the price.
*Some of last year's strongest housing markets now are showing signs of cooling a bit. In the San Francisco Bay area, the median price paid for new and resale homes in December was $612,000, up just 0.5% from a year earlier, according to DataQuick. But prices fell in parts of the Bay Area; they were down 6.3% from a year earlier in Sonoma County and down 5.1% in Solano County, DataQuick says.
One of California's weakest markets last year was the Sacramento area. Anthony Graham, an analyst at Trendgraphix Inc., a provider of housing data, says sellers of previously occupied homes there have had trouble competing with the huge discounts and incentives offered by builders.
Mr. Graham expects average home prices in the Sacramento metro area to fall between 6% and 8% this year, but believes the market will begin to recover modestly by the fourth quarter, assuming that home builders continue to cut their production.
*In Atlanta, where the housing market began to soften in August, business started picking up again in December, says Lewis Glenn, president and chief executive of Harry Norman, Realtors. "There's more negotiation," and builders are cutting prices and offering concessions, such as buying down the borrower's mortgage rate, he says.
*In Scottsdale, some sellers are cutting prices by 10% or more, says Dale Pavlicek, sales manager for the Coldwell Banker Residential office there. "There are a lot of vacant homes on the market," he says. Sellers who bought in the past year or two are barely breaking even or are coming to the closing table with money to pay off their mortgage and other costs, he adds.
*In Manhattan, big bonuses recently doled out by Wall Street firms will help support the market in this year's first half, says Jonathan Miller, chief executive officer of Miller Samuel Real Estate Appraisers in New York. But a rash of new condo developments will help moderate prices. He expects price increases this year to average 5% to 6% in Manhattan. On Long Island, he believes prices are likely to be flat to slightly higher this year.
*Houston remains one of the nation's more buoyant housing markets, supported by job growth in the energy industry. Rob Cook, chairman of the Houston Association of Realtors, says the supply of homes on the market is enough to last about six months at the current sales rate -- what he calls a "balanced" market. Prices are rising only modestly, though, because Texas has plenty of room for new construction. "We just keep expanding out farther and farther," Mr. Cook says.
Its Good To Be Back
I'm finally back in the States after a 6 week trip to India, Thailand, Indonesia, Cambodia and Singapore. It was long and expensive (even more so since it was mostly leave without pay) but it was worth it. Its good to remind yourself why we work so hard during the rest of the year. Here's a picture of a bottle of BinTang Beer I enjoyed at Tanalot, Bali. It was quite a good pilsner (if you like that sort of thing).
Tons of stuff to do in the remaining 11 months of this year. I just got my tax refund for '05 so I guess the first order of action is to file an extension for '06!
Also need to work on beefing up my passive income. My goal to reach $5,000/mo in passive income to achieve financial independance. I'm still very far from that goal. Private trust deeds have proven to be pretty good in the past so I'll pursue that avenue. Prosper is also coming along well. I have $1,500 lent out over 28 loans with an average rate of 18.24% and so far I have had any defaults. I'll probably put more money into it. However its very very time consuming. You spend 2 hours and lend out $200 and then 4 days later you find you were outbid and you need to restart the process. (Or someone outbid you and is willing to lend to a person with lousy credit at 12%. No thanks, I'm not competing with that)
I also want to invest in a commercial property and a buy a piece of land somewhere. Taking of land, here's an interesting tidbit.
Collectively, the nation's ten largest landowners own 10.6 million acres (worth more than 5.5 billion dollars), or one out of every 217 acres in the country.
* Robert E. (Ted) Turner -1,800,000 acres in Colo., Fla., Ga., Kans., Nebr., N.M., Mont., Okla., S.C., S.D.
* Colvin Irving -1,600,000 acres in Me.
* Archie (Red) Emmerson- 1,500,000 acres in Calif.
* Henry Singleton family-1,200,000 acres in Calif., N.M.
* David Pingree heirs- 960,000 acres in Me
* Richard King family heirs- 900,000 acres in Fla., Tex.
* William Reed family- 770,000 acres in Calif., Ore., Wash.
* Allyn Ford-750,000 acres in Calif., Ore.
* Howell Lykes family- 640,000 acres in Fla., Tex.
* Dolph Briscoe Jr.- 560,000 acres in Tex.
Tons of stuff to do in the remaining 11 months of this year. I just got my tax refund for '05 so I guess the first order of action is to file an extension for '06!
Also need to work on beefing up my passive income. My goal to reach $5,000/mo in passive income to achieve financial independance. I'm still very far from that goal. Private trust deeds have proven to be pretty good in the past so I'll pursue that avenue. Prosper is also coming along well. I have $1,500 lent out over 28 loans with an average rate of 18.24% and so far I have had any defaults. I'll probably put more money into it. However its very very time consuming. You spend 2 hours and lend out $200 and then 4 days later you find you were outbid and you need to restart the process. (Or someone outbid you and is willing to lend to a person with lousy credit at 12%. No thanks, I'm not competing with that)
I also want to invest in a commercial property and a buy a piece of land somewhere. Taking of land, here's an interesting tidbit.
Collectively, the nation's ten largest landowners own 10.6 million acres (worth more than 5.5 billion dollars), or one out of every 217 acres in the country.
* Robert E. (Ted) Turner -1,800,000 acres in Colo., Fla., Ga., Kans., Nebr., N.M., Mont., Okla., S.C., S.D.
* Colvin Irving -1,600,000 acres in Me.
* Archie (Red) Emmerson- 1,500,000 acres in Calif.
* Henry Singleton family-1,200,000 acres in Calif., N.M.
* David Pingree heirs- 960,000 acres in Me
* Richard King family heirs- 900,000 acres in Fla., Tex.
* William Reed family- 770,000 acres in Calif., Ore., Wash.
* Allyn Ford-750,000 acres in Calif., Ore.
* Howell Lykes family- 640,000 acres in Fla., Tex.
* Dolph Briscoe Jr.- 560,000 acres in Tex.
Ben Stein Not Hot On Real Estate
Here's an excerpt from Ben Stein's column about why he thinks real estate isn't such a great investment.
So while at the end he admits that
1. Your home is not an investment.
2. If you pay cash for investment real estate, you get rental income. He didn't consider this.
3. If you got a mortgage your leveraged returns are significantly more than the appreciation you got. For example if you put 10% down, and the property appreciation 10%, you just made 100% return (excluding selling commissions, which is justified since no one considers those when talking about stock performance)
Anway, you can form your own opinions and read the whole article here
That means the house has kept up with inflation -- barely.
In fact, when I do the math, I realize that it hasn't fully kept up with inflation. Plus, the owner would have had to pay rental fees (it's on land leased from a Native American tribe), condo fees, taxes, and insurance. Granted, he would also have gotten the great pleasure of living there, but it wouldn't have been a great investment at all.
On the other hand, if the same person had bought the Dow in 1982, he would've made roughly 10 times the money by now, not counting dividends, which would have meant he would've made close to 20 times the money.
...
...
Still, my wife and I bought our house in Malibu for $600,000 in 1990. It might have gone up by 150 percent since then, but in that span, the stock market has more than tripled on the Dow, counting dividends. Other indexes such as foreign stock indexes have gone up vastly more than that.
So while at the end he admits that
yes, real estate rules. It's a good, even great, investment -- just not the perfect investment.I still don't think he did a proper comparison.
1. Your home is not an investment.
2. If you pay cash for investment real estate, you get rental income. He didn't consider this.
3. If you got a mortgage your leveraged returns are significantly more than the appreciation you got. For example if you put 10% down, and the property appreciation 10%, you just made 100% return (excluding selling commissions, which is justified since no one considers those when talking about stock performance)
Anway, you can form your own opinions and read the whole article here
Interesting View on American Manufacturing
Interesting point of view, so I thought I'd share.
“How is it that GM trucks (made in Canada) and Ford trucks (made in Mexico) can be equated with ‘American manufacturing’ while (presumably) Toyota and Nissan trucks (both made in USA) are ‘imports’? The only imported trucks of major brands are Fords, GMC, Chev, & Dodge. If one wishes to support American manufacturing, one need only buy a truck with a Japanese brand name.” – Dave Burge
“How is it that GM trucks (made in Canada) and Ford trucks (made in Mexico) can be equated with ‘American manufacturing’ while (presumably) Toyota and Nissan trucks (both made in USA) are ‘imports’? The only imported trucks of major brands are Fords, GMC, Chev, & Dodge. If one wishes to support American manufacturing, one need only buy a truck with a Japanese brand name.” – Dave Burge
More News From India
Today was Kite Flying Day in Ahmedabad city in Gujarat State. Its an immensely popular festival in only this city in India (and maybe Surat too) and is actually a government and private business holiday as well. People take to their terraces since 5 am and fly paper kites with string coated with shards of glass. They then engage each others kites in a duel and see who can cut the other persons kite.
You can see some kite flying pictures on google images. Its a lot of fun and in the evenings people tie paper lanterns to the kites with candles burning in them. (yes, sometimes mishaps happen and the odd tree gets burnt down!)
This weekend was also the scene for Vibrant Gujarat which was an initiative launched by the Gujarat government to boost global investment in the state through economic reforms and the creation of a Special Economic Zone. According to todays newspaper, the Chief Minister signed some Rs 460 billion ($10 billion USD) worth of agreements with foreign companies for the creation of energy, oil & gas, petro-chemical and other sector factories and infrastructure. According to one calculation that should bring over 1.2 million jobs to the state over the next few years. Since this is India, a lot of these many never actually get built, but even if 50% of them do it'll still be a huge boost to the state's economy.
Ahmedabad's current population is roughly 5 million and land prices here are booming! I expect this trend to continue for a few more years.
You can see some kite flying pictures on google images. Its a lot of fun and in the evenings people tie paper lanterns to the kites with candles burning in them. (yes, sometimes mishaps happen and the odd tree gets burnt down!)
This weekend was also the scene for Vibrant Gujarat which was an initiative launched by the Gujarat government to boost global investment in the state through economic reforms and the creation of a Special Economic Zone. According to todays newspaper, the Chief Minister signed some Rs 460 billion ($10 billion USD) worth of agreements with foreign companies for the creation of energy, oil & gas, petro-chemical and other sector factories and infrastructure. According to one calculation that should bring over 1.2 million jobs to the state over the next few years. Since this is India, a lot of these many never actually get built, but even if 50% of them do it'll still be a huge boost to the state's economy.
Ahmedabad's current population is roughly 5 million and land prices here are booming! I expect this trend to continue for a few more years.
Buying land in India
Finally looks like I'm overcoming my cough and cold. I had to postpone my trip back to the US since I was sick. Its not advisable to travel when you're coughing up phlegm!
Happened to run into an old school friend (I did my high school in India) and it turns out he's now a small local home builder and knows a lot about the local property market. Had a nice long lunch with him and got the scoop on the local land prices. Everything's becoming insanely expensive and there's a good chance its speculative and will end in tears, but there's still good money to be made for those that don't over-leverage themselves. I'm trying to find a patch of land to invest in but there are a few problems.
But once you get into the swing of it, everything falls into place. Plus you meet people who'll make your life easier. I have several friends and relatives who can definitely make my life easier so I'm still looking and trying to see if there's anything worth buying. I looked a piece of land about 12 months and it was about 15% beyond my budget. Its now doubled in value!!!!
I went to see a 2 acre parcel today about 30 miles from home. Thats pretty far when you're driving on a single lane road and sharing it with camel carts, tractors and lorries! Its about a mile from a beautiful bird sanctuary called Nal Sarovar, but I don't think it'll develop for another 20 years. I need something closer than that.
Happened to run into an old school friend (I did my high school in India) and it turns out he's now a small local home builder and knows a lot about the local property market. Had a nice long lunch with him and got the scoop on the local land prices. Everything's becoming insanely expensive and there's a good chance its speculative and will end in tears, but there's still good money to be made for those that don't over-leverage themselves. I'm trying to find a patch of land to invest in but there are a few problems.
I can't buy agricultural land. India's socialist laws prevent anyone who isn't already a farmer to buy agricultural land. Of course there are way around this but its a hassle.
There's a good chance someone will trespass on the land and take possession of it. It happens a lot here and there's usually nothing you can do. You can avoid this buy not buying large patches of raw land but instead buying a small plot in a gated and guarded subdivision(but these lots are more expensive)
The title is in some weird format that is non-intuitive and difficult to follow. If buying agricultural or raw land, if its the "new format" then you can't sell it and it has to be converted to the "old format" and then transferred. You then need to get a no-objection certificate for the intended use. And if you change your mind for the use, you need another one.
The actual deed is in the local regional language, extremely verbose and usually uses some archaic language that was probably colloquial 200 years ago.
There's no title insurance.
But once you get into the swing of it, everything falls into place. Plus you meet people who'll make your life easier. I have several friends and relatives who can definitely make my life easier so I'm still looking and trying to see if there's anything worth buying. I looked a piece of land about 12 months and it was about 15% beyond my budget. Its now doubled in value!!!!
I went to see a 2 acre parcel today about 30 miles from home. Thats pretty far when you're driving on a single lane road and sharing it with camel carts, tractors and lorries! Its about a mile from a beautiful bird sanctuary called Nal Sarovar, but I don't think it'll develop for another 20 years. I need something closer than that.
Happy New Year
I'm still on vacation, but I wanted to wish everyone a happy and prosperous new year.
I visited Bali, Thailand, Cambodia and ushered in the new year in Singapore. I'll write a bit more about my travels shortly but that'll be in a week or so after I get back to the Southern California.
So far I think Bali and Thailand are good places to invest in vacation rental properties. But more on that later!
I visited Bali, Thailand, Cambodia and ushered in the new year in Singapore. I'll write a bit more about my travels shortly but that'll be in a week or so after I get back to the Southern California.
So far I think Bali and Thailand are good places to invest in vacation rental properties. But more on that later!
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